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Readers’ forum: IHT implications of waiving dividend entitlement

14 August 2023
Issue: 4901 / Categories: Forum & Feedback , Income Tax
‘Waiving’ goodbye

My client has a 50% share in a trading company – the remaining shares are owned by her son and daughter respectively. The company traditionally pays dividends at the end of September. My client has approached me to say that she doesn’t need to take any further money out of the company this year and proposed to waive her entitlement to any dividend that is paid.

I’ve been trying to understand the IHT implications of this. I know that a dividend waiver is not a transfer of value if it is made more that 12 months before the right to the dividend has accrued. This will not be the case for a dividend in September this year as even if a waiver is made today it will not meet the 12-month limit. But what exactly are the IHT consequences? Say the total dividend was £200 000 and my client waives...

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